https://www.lombardiletter.com/signs-bitcoin-euphoria-ended/29942/
The Signs Are Clear That the Bitcoin Euphoria Has Ended
Alessandro Bruno BA, MA
Lombardi Letter
2018-08-23T10:24:27Z
2018-08-23 10:24:27 cryptocryptocurrenciesethereumgoldTurkish liraturkeybitmainbitmain ipobitcoinA Bitcoin collapse is underway. We may have reached the end of the cryptocurrency era. The eager bulls that still hoped for Bitcoin to return to its December 2017 record-high prices are having to make room for the bears.
Analysis and Predictions 2019,Bitcoin,Cryptocurrencies,U.S. Dollar
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The Signs Are Clear That the Bitcoin Euphoria Has Ended

Home » Bitcoin » The Signs Are Clear That the Bitcoin Euphoria Has Ended

Bitmain is rumored to be preparing to go public with an $18.0-billion initial public offering (IPO). Even the seemingly sensible idea of investing in the technology that surrounds cryptocurrencies might be a bad idea.

Perhaps Bitmain should it fulfill its IPO expectations at the end of 2018 or early 2019 on the Hing Kong Stock Exchange—and raise its $18.0-billion target—may infuse some confidence throughout the crypto world. After all, that amount would make it one of the most successful tech IPOs ever.

To add legitimacy, Bitmain’s potential partners include CoinDesk, Tencent (the seventh-largest company in the world by market capitalization), and Japan’s Softbank.

But even such an IPO won’t shake off fundamental problems with the very concept of cryptocurrencies.

We may have, indeed, reached the end of the cryptocurrency era. The eager bulls that still hoped, if not outright expected, for Bitcoin to return to the record-high prices recorded in December 2017 are having to make room for the bears.

When Will Bitcoin Reach Its Bottom?

The only valid question left to ask about Bitcoin and other cryptocurrencies is: When will it reach rock bottom?

Alternatively, given gold and silver prices’ timid performance, investors in countries under pressure from sanctions and currency bears like Turkey and Russia might turn to Bitcoin as a safe-haven commodity instead of precious metals. (Source: “Turks eye-up cryptocurrencies as lira loses value,” Ahval, August 21, 2018.)

During the course of the Turkish lira’s devaluation against the U.S. dollar throughout the course of 2018, Turks have become the biggest buyers of Bitcoin in Europe. Some 18% of them own the cryptocurrency.

But Turkey represents an unusual scenario, the outcome of which cannot be predicted yet. Still, the way some investors are reacting to the crisis shows why Bitcoin and other cryptocurrencies have become so popular: distrust.

Is Bitcoin the New Gold?

Turks distrust the government and fear the local currency’s weakness. Thus, they shift their gaze toward cryptocurrencies, which might be described as “digital gold.”

The mystery remains why investors bother with the virtual and highly volatile version of gold, rather than simply buy the real thing. Indeed, the signal that Bitcoin is about to get a fatal blow will come when gold prices break the current stall.

Similarly, just as the high dollar has hurt gold prices, cryptocurrencies will remain under pressure so long as the Federal Reserve continues to raise interest rates. There may have been hints of a rally, as Bitcoin returned to the $6,000 level in mid-August.

Yet, even at that price, Bitcoin has dropped compared to July and hovers at a third of its record valuation from January 2018.

A similar fate has befallen the other cryptocurrencies. They’re down well over 50% from the start of the year.

The Psychology of Bitcoin

Cryptocurrencies, like the Tulips of the 18th century (Tulipmania was the first official market bubble) are a product of euphoria. Or, rather, the intensity of their success relies on enthusiasm and then euphoria.

People simply fear missing out on a big opportunity. Nobody wants to end up asking themselves, what if? The real fuel for Bitcoin, then, has been described as FOMO: Fear of Missing Out.

That’s what drove Bitcoin to $19,000 and beyond.

Now, the reverse is about to happen. FOMO will give way to fear of staying in (FOSI). Panic will replace euphoria and the crypto bubble will burst. As the price drops beyond a threshold—as yet to be determined, but we’re probably close to it now—holders become more alarmed, wanting to sell.

Cryptocurrencies are about to suffer a bad moment. While some observers expect a soft landing through a series of small corrections, cryptocurrencies’ dynamics point downwards.

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